Posts Tagged ‘comcast’

Comcast’s $45 Billion Purchase Of Time Warner Cable Is Trouble For Apple TV

Jay Yarow


Mike Nudelman/Business Insider

Apple May Have Just Acquired The Final Piece It Needs To Make A Killer Apple TV

A funny thing happened this week.
After years of rumors, speculation, and wishing, we got two solid reports that said Apple was really ready to launch a full-on TV product.

Both the Wall Street Journal, and Bloomberg said Apple was planning to release an Apple TV this year. Bloomberg predicted an April reveal, and the WSJ predicted a June reveal.

These reports followed Mark Gurman at 9to5Mac saying a new Apple TV was coming in the first half of the year. All three said Apple was revamping its little hockey puck TV box, not releasing a big screen TV.

The Journal and Bloomberg both said Apple was partnering with Time Warner Cable to deliver video content to users. Apple TV would add a nice layer of user interface to Time Warner’s video stream.

However, just hours after the reports broke, a much bigger story involving the TV industry hit. Comcast was planning to buy Time Warner Cable for $45 billion in an all-stock deal.

We don’t know what this means for Apple’s TV plans, but it sure looks like whatever Apple was planning will be thrown into flux.

The Comcast-Time Warner Cable deal won’t close for a while and Comcast shouldn’t have influence over Time Warner’s plans until the deal is officially closed. But who knows if Time Warner will want to dive into something as big as a partnership with Apple at the same time that it’s getting acquired.

Our guess is that in the short term whatever Apple was working on with Time Warner Cable should be safe. Time Warner has been in play for a while, so Apple must have been aware this could happen.

In the long run, things get a little fuzzier.

On the day that news broke that Apple was working with Time Warner Cable, UBS analyst Steven Milunovich put out a note on the news titled, “Attempt to Preempt Comcast in Set-Top Box.”

Milunovich says Comcast has an agreement with Cox to use its set-top platform. Presumably, when it owns Time Warner Cable, it’s going to push those customers to use its platform. That would mean the three biggest cable companies, or ~35 million subscribers, will be using Comcast’s set top box.

Milunovich says that Comcast has been aggressively investing in its own set-top box platform, called “X1”:

“Today’s X1 features include voice-based navigation and search, personalized recommendations, a collection of customizable widgets, and access to third-party apps such as Facebook, Twitter, and Pandora. Internally referred to as X2, Comcast is in the midst of migrating its X1 users to a next-gen cloud-based device. This upgrade provides cloud-based DVR, mobile device synchronization, and app airplay capabilities.”

This makes it sound like Comcast would not want to hand over its video signal to Apple. It sounds like it thinks it can build a better TV experience.

It’s possible Apple makes something so great Comcast decides to drop its own platform, but we doubt it. It looks like when Comcast buys Time Warner Cable, Apple will have one less partner for trying to crack the TV market.

And this is the problem for Apple. Breaking into the TV market is tough because it’s a messy industry. It’s fractured, but the power is still in a few hands.

As Steve Jobs said in 2010, you can give consumers a box, but then it’s just another box on top of a box. “You end up with a table full of remotes, cluster full of boxes, bunch of UIs.”

Here’s the full quote from Jobs in 2010, which remains the best explanation of why Apple has struggled to crack TV:

“The problem with innovation in the television industry is the go to market strategy.

The television industry fundamentally has a subsidized business model that gives everybody a set top box for free, or for $10 a month. And that pretty much squashes innovation because no one is willing to buy a set top box.

Ask TiVo. Ask Replay TV. Ask Roku, ask Vudu, ask us, ask Google in a few months. Sony’s tried, Panasonic’s tried, we’ve all tried. So, all you can do is add a box onto the TV system.

You can say … I’ll add another little box with another one. You end up with a table full of remotes, cluster full of boxes, bunch of UIs.

The only way that’s ever gonna change is if you really go back toy square one and you tear up the set top box and design it with a consistent UI and deliver it to the customer in a way they’re willing to pay for it.

Right now there’s no way to do that. So that’s the problem with the TV market.

We decided, do we want a better tv or a better phone? The phone won out because there was no way to get it to market. What do we want more? A better tablet or a better tv? Well, probably a better tablet. But it doesn’t matter because there’s no way to get a tv to market. The TV is going to lose until there is a viable go to market strategy, otherwise you’re just making another TiVo.

That make sense?

It’s not a problem of technology, it’s not a problem of vision, it’s a fundamental go-to-market problem.

There isn’t a cable operator that’s national, there’s a bunch of operators. And it’s not like there’s GSM, where you build a phone and it works in all these other countries. No every single country has different standards. It’s very ‘tower of babble-is’, not that’s not the right word. Balkanized. I’m sure smarter people than us will figure this out. But when we say Apple TV is a hobby, that’s why we use that phrase. ”

Read more: http://www.businessinsider.com/apple-tv-comcast-time-warner-2014-2#ixzz2tbLU2M89

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Article from WSJ Online.

It looks so easy from the outside. An entrepreneur with a hot technology and venture-capital funding becomes a billionaire in his 20s.

But now there is evidence that venture-backed start-ups fail at far higher numbers than the rate the industry usually cites.

About three-quarters of venture-backed firms in the U.S. don’t return investors’ capital, according to recent research by Shikhar Ghosh, a senior lecturer at Harvard Business School.

The Wall Street Journal reveals its third annual ranking of the top 50 start-ups in the U.S. backed by venture capitalists.

Compare that with the figures that venture capitalists toss around. The common rule of thumb is that of 10 start-ups, only three or four fail completely. Another three or four return the original investment, and one or two produce substantial returns. The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail.

Mr. Ghosh chalks up the discrepancy in part to a dearth of in-depth research into failures. “We’re just getting more light on the entrepreneurial process,” he says.

His findings are based on data from more than 2,000 companies that received venture funding, generally at least $1 million, from 2004 through 2010. He also combed the portfolios of VC firms and talked to people at start-ups, he says. The results were similar when he examined data for companies funded from 2000 to 2010, he says.

Venture capitalists “bury their dead very quietly,” Mr. Ghosh says. “They emphasize the successes but they don’t talk about the failures at all.”

There are also different definitions of failure. If failure means liquidating all assets, with investors losing all their money, an estimated 30% to 40% of high potential U.S. start-ups fail, he says. If failure is defined as failing to see the projected return on investment—say, a specific revenue growth rate or date to break even on cash flow—then more than 95% of start-ups fail, based on Mr. Ghosh’s research.

Failure often is harder on entrepreneurs who lose money that they’ve borrowed on credit cards or from friends and relatives than it is on those who raised venture capital.

“When you’ve bootstrapped a business where you’re not drawing a salary and depleting whatever savings you have, that’s one of the very difficult things to do,” says Toby Stuart, a professor at the Haas School of Business at the University of California, Berkeley.

Venture capitalists make high-risk investments and expect some of them to fail, and entrepreneurs who raise venture capital often draw salaries, he says.

Consider Daniel Dreymann, a founder of Goodmail Systems Inc., a service for minimizing spam. Mr. Dreymann moved his family from Israel in 2004 after co-founding Goodmail in Mountain View, Calif., the previous year. The company raised $45 million in venture capital from firms including DCM, Emergence Capital Partners and Bessemer Venture Partners, and built partnerships with AOL Inc.,  Comcast Corp.,  and Verizon Communications Inc.  At its peak, in 2010, Goodmail had roughly 40 employees.

But the company began to struggle after its relationship with Yahoo Inc. fell apart early that year, Mr. Dreymann says. A Yahoo spokeswoman declined to comment.

In early 2011 an acquisition by a Fortune 500 company fell apart. Soon after, Mr. Dreymann turned over his Goodmail keys to a corporate liquidator.

All Goodmail investors incurred “substantial losses,” Mr. Dreymann says. He helped the liquidator return whatever he could to Goodmail’s investors, he says. “Those people believed in me and supported me.”


Daniel Dreymann’s antispam service Goodmail failed, despite getting $45 million in venture capital.

How well a failed entrepreneur has managed his company, and how well he worked with his previous investors, makes a difference in his ability to persuade U.S. venture capitalists to back his future start-ups, says Charles Holloway, director of Stanford University’s Center for Entrepreneurial Studies.

David Cowan of Bessemer Venture Partners has stuck with Mr. Dreymann. The 20-year venture capitalist is an “angel” investor in Mr. Dreymann’s new start-up, Mowingo Inc., which makes a mobile app that rewards shoppers for creating a personal shopping mall and following their favorite stores.

“People are embarrassed to talk about their failures, but the truth is that if you don’t have a lot of failures, then you’re just not doing it right, because that means that you’re not investing in risky ventures,” Mr. Cowan says. “I believe failure is an option for entrepreneurs and if you don’t believe that, then you can bang your head against the wall trying to make it work.”

Overall, nonventure-backed companies fail more often than venture-backed companies in the first four years of existence, typically because they don’t have the capital to keep going if the business model doesn’t work, Harvard’s Mr. Ghosh says. Venture-backed companies tend to fail following their fourth years—after investors stop injecting more capital, he says.

Of all companies, about 60% of start-ups survive to age three and roughly 35% survive to age 10, according to separate studies by the U.S. Bureau of Labor Statistics and the Ewing Marion Kauffman Foundation, a nonprofit that promotes U.S. entrepreneurship. Both studies counted only incorporated companies with employees. And companies that didn’t survive might have closed their doors for reasons other than failure, for example, getting acquired or the founders moving on to new projects. Languishing businesses were counted as survivors.

Of the 6,613 U.S.-based companies initially funded by venture capital between 2006 and 2011, 84% now are closely held and operating independently, 11% were acquired or made initial public offerings of stock and 4% went out of business, according to Dow Jones VentureSource. Less than 1% are currently in IPO registration.

Read more here.

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Here is another merger bit of news from TechNewsWorld.

“If regulators approve Comcast’s acquisition of a majority interest in NBC Universal, the cable company will instantly become a major content producer, going head to head with ABC, Viacom and Fox. “Comcast believes that controlling content will ensure the future successof its distribution system,” said entertainment-corporate attorney Jeff Liebenson.

It’s official: Comcast (Nasdaq: CMCSK) has engineered what appears to be the biggest media joint venture of the year — a multibillion-dollar merger that will combine General Electric’s (NYSE: GE) NBC Universal with Comcast’s own cable networks.

Once complete, Comcast will take majority ownership of NBC, ending GE’s 20 year control of the network. It is a complex transaction that, among other things, requires GE to buy Vivendi’s 20 percent stake in NBC for US$5.8 billion — a deal within a deal that was agreed upon last month.

Terms of the transaction call for Comcast to pay GE some $6.5 billion and contribute programming valued at $7.25 billion in exchange for its 51 percent stake.

The merger still must meet regulatory approval, which may require that Comcast make certain concessions. Already some members of Congress are calling for hearings to determine the merger’s impact on consumers.

NBCU chief Jeff Zucker will report to Stephen Burke, Comcast’s operating chief, who will oversee the takeover once the deal is complete.

For all the complexity surrounding the transaction, its end goals are fairly simple: GE wants to focus on other elements of its diverse corporate kingdom. Comcast wants access to content for distribution on its own networks.”

Read the full article here.

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